First Solar Announces Second Quarter 2024 Financial Results

First Solar, Inc. announced its financial results for the second quarter of June 30, 2024. The company reported net sales of USD 1 billion, up USD 0.2 billion from the prior quarter, driven by increased module sales volume and a higher average selling price per watt. Net income per diluted share rose to USD 3.25 from USD 2.2 in the first quarter. 

First Solar's net sales increased significantly both quarterly (Q2 2024 vs. Q1 2024) and semi-annually (first half of 2024 vs. the first half of 2023), indicating robust demand and higher sales volume. Gross profit also rose substantially, indicating effective cost management and potentially higher margins. 

Operating income showed a strong increase, reflecting improved operational efficiency and higher revenue. Research and development expenses increased, indicating continued investment in innovation and technology development. Production start-up costs also rose. Litigation losses, which were significant in Q2 2023, had minimal impact in Q2 2024.

Net income grew significantly both quarterly and semi-annually, and both basic and diluted earnings per share (EPS) increased substantially. Net cash provided by operating activities was positive at USD 460,737 thousand, a significant improvement compared to the negative cash flow in the same period last year, indicating a strong cash generation from core operations.

The net cash balance decreased to USD 1.2 billion from USD 1.4 billion at the end of the previous quarter, primarily due to capital expenditures for new US factories in Alabama and Louisiana and repayment of working capital loans in India, partially offset by higher operating cash flows.

First Solar's full-year 2024 guidance remains unchanged, with net sales projected at USD 4.4 billion to USD 4.6 billion and earnings per diluted share expected to be between USD 13 and USD 14. Other key guidance metrics include the gross margin of USD 2 billion to USD 2.1 billion, operating income of USD 1.5 billion to USD 1.6 billion, and capital expenditures of USD 1.8 billion to USD 2 billion. 

The company forecasts a net cash balance of USD 0.6 billion to USD 0.9 billion by year-end 2024. Year-to-date net bookings stand at 3.6 GW, with 0.9 GW booked since the first quarter earnings call, at an average selling price of 31.6 cents per watt. The expected sales backlog is 75.9 GW.

The company also highlighted its anticipated earnings cadence, with net sales and cost of sales expected to be approximately 40 percent in the third quarter and 60 percent in the fourth quarter, excluding Section 45X tax credits. First Solar forecasts Section 45X tax credits of approximately USD 240 million in Q3 and USD 335 million in Q4. 

As of June 30, 2024, First Solar's total current assets amounted to USD 3,948,923 thousand, a decrease from USD 4,634,809 thousand on December 31, 2023. This decline is primarily due to a significant reduction in cash and cash equivalents and marketable securities. On the other hand, total current liabilities rose to USD 1,772,629 thousand from USD 1,306,158 thousand, mainly driven by an increase in deferred revenue and the current portion of debt. Despite this, the current ratio (Current Ratio = Current Assets/Current Liabilities​) remains robust at approximately 2.23, indicating the company still has sufficient liquidity to cover its short-term obligations.

First Solar's property, plant, and equipment saw a substantial increase from USD 4,397,285 thousand to USD 5,139,000 thousand, suggesting ongoing capital expenditures likely related to manufacturing facility expansion. Furthermore, deferred tax assets and government grants receivable experienced significant growth, reflecting potential future tax benefits and receivables from government grants.

The company's long-term debt slightly decreased from USD 464,068 thousand to USD 418,725 thousand, indicating some debt repayment. Deferred revenue also notably decreased from USD 1,591,604 thousand to USD 1,258,880 thousand, possibly due to revenue recognition as sales were fulfilled. Stockholders' equity increased from USD 6,687,469 thousand to USD 7,255,397 thousand. This growth is driven by a rise in accumulated earnings.